Microsoft Buys LinkedIn: Stakeholder Implications

Microsoft has agreed to acquire professional social network LinkedIn for $26.2 billion. The Seattle-based Microsoft intends to purchase LinkedIn at $196 per share, a 50 percent premium over last Friday’s closing share price.

Microsoft made it clear that LinkedIn will retain its independence for its culture and brand – which is important to note because acquisition news often creates panic among the existing customer base of the acquired company.

What does this deal mean for some of the key stakeholders? Let’s take a look:

• For Microsoft. This is a powerful combination. You’d be hard pressed to find a professional who isn’t on LinkedIn, so Microsoft is tapping into an engaged and well-connected base of users, not to mention the most up-to-date database of current companies and positions and millions of vendors. This acquisition is mainly about getting a big dataset that can be used across Microsoft’s products. For example, Cortana, Microsoft’s virtual assistant, has been focused on process intelligence, preventive maintenance and real-time analytics. Access to the LinkedIn network and product portfolio brings Cortana very quickly into the business-to-business realm. Another example is Microsoft Dynamics and the access that it will be able to bring to a salesperson in combination with LinkedIn Sales Navigator. Additionally, imagine what the data teams at Microsoft are talking about today. They can envision using the database for more personalized in-app content and promotions through Microsoft cloud products. For example, in a marketing automation world where everyone is saying they do account-based marketing and personalization via big data and analytics, this data can be a game-changer. Of course, the data privacy lawyers will need to hash out how much access these teams receive. As always, the devil is in the integration.

• For LinkedIn. LinkedIn now has the opportunity to move from a company that helps people find new jobs and keep tabs on connections to one that can influence a professional’s daily work. This also adds a level of stability, access and areas for product innovation and growth. While LinkedIn’s acquisition of learning company Lynda.com 14 months ago indicated its vision for providing access to users’ training and education as well as job searching, this deal greatly broadens its reach. Although Microsoft CEO Satya Nadella and the LinkedIn team will be focused on growth and integration, they will need to temper this with a focus on maintaining LinkedIn’s brand and company culture while assimilating it into one of the largest technology companies.

• For Microsoft partners. These teams should be excited at the prospect of gaining access to new learning and training opportunities from offerings like LinkedIn Sales Navigator and the learning capabilities acquired from Lynda.com. Additionally, they can expect enhancements to programs based on the data that Microsoft will be able to get through the LinkedIn network.

• For Microsoft customers and potential customers. One of the largest challenges for implementing technologies can be internal buy-in, but what if one of the Microsoft products you were considering – say, Microsoft Dynamics – had an automatic tie-in for users via LinkedIn Sales Navigator, a product your sales teams already use? That can make a big impact on upcoming purchase decisions. Not much will change for several months, as it will take time for the acquisition to be completed – and Microsoft has assured it will remain business as usual. However, in the not-so-distant future, customers can expect more sales calls for cross-sell and upsell.

• For LinkedIn users. No changes are expected for now for LinkedIn users. LinkedIn has always been protective of its user community, which will be keeping many eyes out for changes resulting from this acquisition. If it becomes clear that there is “open season” on LinkedIn data, Microsoft would risk massive backlash from this community and new competitors emerging.

• For competitors. For marketing and sales cloud companies, this acquisition represents a huge shift in the marketplace, with Microsoft getting access to a hugely valuable database of business information and relationships. This deal also brings Cortana front and center for b-to-b professional users, something that Apple’s Siri and Amazon’s haven’t focused on to date. Additionally, it seems everyone wants to be an account-based marketing player (or is at least dropping that term into their marketing collateral) and Microsoft, for sure, is now in the ABM catbird seat. For now, it will need to rest on the “it will take time to integrate and we’ll see what gets integrated” story.

The Pros and the Cons

While there are a lot of people who are saying this is great news, there is always the other perspective. LinkedIn is the world's best b-to-b database because its users have a vested interest in keeping their data updated. But what happens if – or when – this data is integrated with Microsoft, and LinkedIn users receive a massive uptick in sales outreach? This perceived intrusion could cause people to shy away from using the platform or greatly reducing the amount of information they share. This would also opens the door for a new player in the b-to-b professional social networking space to enter the game.

So, what are the main takeaways? LinkedIn shareholders should be doing a jig, but there could be drawbacks, depending on how the integration is managed. This deal also raises questions about what else could be in the Microsoft acquisition plan – potentially a marketing automation platform?

Finally, the acquisition is certain to impact social network competitors like Facebook at Work – a LinkedIn-esque offering that has struggled to take off and capture market share. Although the Microsoft acquisition will extend the reach of LinkedIn into users’ day-to-day activities, in the long run it could also create an opening for competitors that are perceived as being independent.

We’re interested in hearing your thoughts too – be sure to leave them in the comments section!